
TL;DR price broke through resistance and promptly retraced — meaning bullish confidence was lost.
For several days now, bitcoin has been trading flat — the tail end of a consolidation within the triangle that we have seen since the China-inspired move above $10k. That ended yesterday evening, when bitcoin pushed up through resistance at $9,400, moving as high as $9,587 (Bitstamp).
At that point, it looked as if another move higher was on the cards. Bitcoin stopped at the 100-day moving average, a very predictable point to retrace after a $400 move up. What we were looking for at that point was a retest of resistance, this time as support. However, while bitcoin did close the day above $9,400, it has not managed to stay there.
This morning, BTC fell back again and is currently trading in the $9,200 area — practically a full retrace from this time yesterday. This appears to have been a fakeout, and it naturally raises questions about the next leg of the trend.
Volumes had been very low after the China spike, and it is likely that this was another liquidation bot play: bots prowl platforms like BitMex, pushing the price in one direction or another when they can to liquidate over-leveraged traders and profit from the resulting movement.
For now, BTC is back to where it started. We’re still above the 200 DMA, which is generally bullish. (It will be some time before the 50-day MA tilts back up again and we see a Golden Cross.) Bitcoin is also making higher lows, for now.
Since volumes are back down again, we have to be mindful that the next move could be another bot-driven one, this time lower, designed to margin call any traders who are leveraged short without the appropriate stop losses. Overall, we’re still watching two numbers: support at around $9,000, and resistance around $9,400. We’ll need to close and stay below or above one of these to know what’s next for bitcoin.
Right at this point, it seems like further manipulation is more likely than an ‘organic’ move. The market is still absorbing the impact of the move above $10,000 and subsequent retrace. It does have a decision to make — above $9,400 and then on past $10k, or else below $9k and further down. But without the volumes to back it up, we’re not confident that any given move will follow through at this point. It’s easy pickings for whales with the money to choose who wins and loses.
Medium-term, the trend is upwards. We think the correction from the parabola April-to-June parabola has played out, and we’re in the next phase of the bull market (call it wave 3 if you’re into Elliott Waves). But short-term, we’re still expecting some significant volatility and lots of games to separate unprepared traders from their bitcoins, before the next move up.
Article by Moonhub
